Pail, Inc. holds 100 percent of the common stock of Shovel Company, an investment acquired for $680,000. Immediately following the combination, Pail's net assets have a book value of $1,150,000 and a fair value of $1,390,000. The book value and the fair value of Shovel's net assets on the date of combination are $400,000 and $550,000, respectively. Immediately following the combination, a consolidated balance sheet is prepared.Based on the information given above, goodwill will be reported in the consolidated balance sheet in the amount of:
A. $270,000.
B. $240,000.
C. $130,000.
D. $150,000.
Answer: C
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